VHFA explains rental revolving loan fund, supports small change to 3% rent‑cap to allow waivers
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Summary
VHFA described a $10 million revolving loan program that funded 265 rental units and recommended retaining a 3% statutory rent‑increase cap with an administrative waiver process when verified costs exceed that threshold.
Laura Collins, executive director of the Vermont Housing Finance Agency, updated the committee on a $10 million rental revolving loan fund VHFA administers and asked the committee to preserve a modest statutory change passed in the BAA that allows VHFA to approve rent increases above the 3% cap when owners document higher costs.
"What we put in statute was we would only allow rents to increase by 3% a year," Collins said, describing how unexpected insurance and property‑tax increases have driven operating costs higher than the 3% threshold for some projects.
Collins said the revolving loan program, which was set up to fill gaps for moderate‑income rental developments, has already been awarded and will finance roughly 265 apartments now in development. The $10 million appropriation was designed to be a subordinated loan making up to 35% of total development cost; VHFA described median subsidy per unit in the low‑to‑mid‑thirties of thousands of dollars and said the revolving structure returns capital to the state for future projects.
The language the committee reviewed adds the phrase that rent increases "do not exceed 3% or an amount otherwise authorized by VHFA," allowing VHFA to approve higher increases on a project‑by‑project basis if owners demonstrate cost increases. Collins said she wants to keep the 3% target in statute and to require owners to document cost pressures to secure a waiver.
Committee members asked for figures on how many projects will request waivers and for data on the program’s geographic distribution; Collins said she would provide project counts and noted the program prioritized projects outside Chittenden County. The committee discussed whether the BAA language should be preserved in the housing bill if the BAA does not ultimately carry it through; members supported having draft amendment language available for the floor and for finance to review.
No formal vote to change statute occurred at the meeting; members asked VHFA for the program data to inform future amendment drafting.